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No More Bad Products?

BY JEFFREY F. RAYPORT

JEFFREY F. RAYPORT is an operating partner at Castanea Partners, a Boston-based private equity firm focused on retail, information, and marketing services, and was formerly a faculty member at Harvard Business School. From The Conversation, at http://blogs.hbr.org/cs.

Not long ago, I had the pleasure of visiting the resplendent headquarters of Hearst Corp., the privately held media empire that owns Good Housekeeping magazine—and its famous Good Housekeeping Seal of Approval. An executive there took me on a walk around to see the wonders of this fancy LEED gold-certified tower. The building hovers mightily above Hearst’s historic façade located on the west side of Manhattan.

On the twenty-ninth floor, we encountered what was, to my mind, a remarkable sight. It was the Good Housekeeping Research Institute. This is where staff researchers review products that include kitchen and laundry appliances, cookware, coffeemakers, vacuum cleaners, recipes, and even bathing suits.

The Institute, which officially opened in January 2010, includes the Model Kitchen, the Testing Station for Household Devices, and what’s called the “Domestic Science Laboratory.” Here, the Seal is awarded to a few select products that lab staffers deem worthy.

And this has been going on for a very long time: The Seal was created in 1909.

The facilities were a marvel to behold. During my visit, a young man in a lab coat visible through a glass wall was embedding tiny black strands of rayon deep into a patch of beige carpeting to test two dozen or so handheld vacuum cleaners for efficacy in removing domestic dirt. Seeing this, it seemed no exaggeration that the magazine can claim “an illustrious history of consumer protection.”

Indeed, beginning in 1902, it started testing products for quality, safety, and reliability. At that time, Good Housekeeping offered a money-back guarantee for any product advertised in its pages, and it accepted advertising only from companies whose products its testers had approved.

But, in 2011, ours is a different world, which made me wonder: Were these Hearst facilities artifacts of a bygone era? Is the Seal still something we need? Does anyone need experts to identify “good” products?

Today’s business world reflects a near-perfect reversal of the era in which the Seal was created. Today, consumers, not marketers, rule the roost.

As consumers, we readily dictate how and when marketers reach us. We use do-not-call lists to avoid telemarketers, DVRs to record TV programs and fast-forward through ads, online pop-up blockers to avoid unwanted Web promotions, and settings on the latest browsers that enable us to prevent marketers we self-identify (including online ad networks and third-party ad servers) from inserting ad messaging on our Web pages.

That’s not all. Before the rise of Facebook and Twitter, the Web gave consumers myriad ways to share perspectives with one another. They could search blogs for comment and sentiment; Google search helped. Consumers also methodically began to review specific products one by one. Amazon showed the way: Reviews (and reviews of reviewers) turned out to drive online sales. A vast swath of e-retailers followed Amazon’s example. And outsourced technology providers, such as Bazaarvoice, made it relatively straightforward to add consumer product reviews to retail sites.

In addition, a plethora of Web-based businesses appeared explicitly to host consumer reviews. Epinions created a platform to aggregate consumers’ product reviews. Shopzilla, and its Bizrate site, skipped product reviews to host retailer reviews. TripAdvisor made millions of consumer reviews available for travel, while Zagat did it (from a crowdsourced model in its guidebooks) for restaurants and Yelp did it for, well, everything in the Yellow Pages.

Nothing illustrates how mainstream consumer reviews have become than the spot for Cars.com that appeared during this year’s Super Bowl. In it, cars in a dealer showroom yakked with one another about what consumers said about them online.

Of course, experts matter. But, in many cases, collective wisdom seems to matter more. At least, that’s what fifteen years of e-commerce experience has shown us. Radical transparency is the order of the day.

Now that consumers can “assess” physical retail and hospitality venues (using FourSquare) and consult retail and product reviews (and prices) from the aisles of brick-and-mortar stores (using RedLaser or ShopSavvy), this is no longer an online-only phenomenon.

Consumers are helping one another “out” bad products—and thus avoid purchases that would otherwise lead to seriously bad cases of buyer’s remorse.

Don’t get me wrong. I’m not suggesting that all those tchotchkes at Christmas Tree Shops and Michael’s will go away suddenly, or ever. The price-quality inference, a time-honored marketing concept, will surely continue to operate. Price usually signals quality. That’s why we normally define “value” as some kind of ratio between product quality (including performance) and price (including access costs). When we buy a truly lousy product, we’ll often accept it as good “value” as long as we purchased it at a compellingly low price.

Of course, price/quality trade-offs of this kind factor into the collective psychology of consumer reviews. They’re also variables that the Good Housekeeping Seal of Approval and Consumer Reports consider, too.

The difference now is that tens of millions of consumers are busily doing what only those hard-working staffs at Hearst and Consumers Union have done for years. They’re deciding, collectively and fast, what’s good and what’s bad. They’re finding ways to kill bad offers more efficiently than ever before.

All of this suggests that consumers can readily make it non-economic for companies to sell bad products. Bad products were always bad for consumers. Now, they’re bad for business, too.

How Am I Different?

What you are most embarrassed about and what you are often trying to hide is exactly what will differentiate you. For a time, I used to not want to appear young. I would have pictures of myself in three-piece suits, wearing a tie, pretending I was a fortysomething professional who just looked 12. Yet everything I have been doing for the last decade, and much of my point of difference, has stemmed from my youth—school students were able to relate to me, and I was able to carry credibility with companies when I was talking about the next generation. My relative youth is equally valued now by my clients that are seeking a more innovative approach to their business, because it allows me to see things differently and not be conditioned by decades of experience.

In other words, what I thought was a weakness was exactly what my clients liked. Have you ever heard the saying, “Your greatest strength will become your greatest weakness if taken to the extreme”? Well, what I am talking about is the reverse of that. What you perceive to be your greatest weakness may turn out to be your greatest point of difference. This may sound counterintuitive, but it is extremely powerful if you can harness it.

My shortsightedness in this regard—for many years—reminds me of a great mate of mine who suffered from the same disease. His name is Adam Fraser, and he has a doctorate in physiology. He has spent the last few years working with executives to enhance their personal performance. You wouldn’t believe it, but when he started out he used to hide the fact that he had spent a decade in science laboratories. When I asked him what he actually did in those labs, he told me stories of working with world-class athletes and studying high-class performers from all walks of life, testing different things about how they achieved such physical and mental domination in their sports.

I went berserk! I said, “Dude, you need to tell people this. It makes you truly different from so many other people out there claiming to be able to offer the same advice who read about it in a Tony Robbins book.”

He now goes by the nickname Dr. Adam. Needless to say, he has fully embraced his background and is prospering as a result.

You should be proud of what you have done, proud of who you are. Use it for good; don’t hide from it. Understand that sameness is your enemy. E-N-E-M-Y! Avoid it like the plague. Unless your idea is unbelievably different in itself, there is every chance that someone is already offering what you are trying to sell. Why you? Why should I buy your version of this same solution? You absolutely, positively, uncompromisingly must find a way to differentiate your offer. And if you cannot differentiate your offer, differentiate the market you are selling it to. If you can’t do that, differentiate yourself, the offerer. And if you can’t do that, go back to the drawing board and develop a better offer.

Ask yourself, “How am I different?”

Then ask again, “Is it really that different?”

And then consume yourself with the question, “Why would anyone care?”

And whatever you do, do not underestimate the power of differentiating.

Were there more “characters” back in the days when you could smoke in your office? Maybe. There is a degree to which some of the “fun” has been sucked out of the advertising industry. Periods of economic hardship have been known to take their toll on excessive gaiety.

Every company is working harder, doing more with fewer people. In most companies, there isn’t a lot of time for standing around. But for most creatives, fun is in creating. And on that score, there has never been a more rewarding time.

Are there fewer boozy lunches and coke-fueled Christmas parties now? Yes to the former (though the latter seems to be undergoing something of a resurgence). Ideally, you’ll have a Brit of other European on your team. They will take the lead on ordering alcohol at lunch so you’ll feel more comfortable joining in, if that’s something you’re interested in.

But here’s something to remember: There was a downside to all that “fun” people (men) were having back in the day. Some of those “characters” were also sometimes those men who literally or figuratively chased their “girl” around the desk. They were sometimes those men whose bullying and anger issues were passed off as “intensity.”

All the vices are still there—more of them are just kept out of the workplace.

And if you ever think that philandering has gone out of the industry, a quick trip to Cannes will relieve you of that delusion.

That’s Where the Money Is

In 1978, I put a small amount of money in a Wells Fargo IRA account, promptly moved from California to Texas for a couple years, and forgot about the deposit. It might have been $50. When I remembered it twenty years later, I figured I’d either have a fortune or, more likely, the remainder had gone to the state. Then, a few years ago, I started receiving something like an annual 1099R form from Wachovia Bank, for $10 to $15. I had no idea where this came from until some forms arrived last year from Wachovia, after its acquisition of Wells Fargo, and on it was a mention of a Wells Fargo branch in Redwood City, where I once lived. Ah, now I remembered the IRA.

Clearly, the money had somehow moved from Wells to Wachovia and back again. But the impressive thing is that these kindly bankers had faithfully taken care of my IRA for more than thirty years and then tracked me down after at least five changes of address. I still had about $50, so obviously the fees were offsetting income.

Then, in the last two statements, I noticed the balance was falling. I called Wells, found I was down to $16.22, and talked with a kindly lady who told me that for the past few months I’d been incurring a $10 monthly service charge. She was unable to waive the fees. And the only way to get my $16.22 was to write the bank a letter or visit a branch in person. My other option? “Well, you can just give us the money,” she said. “And we’ll close the account.”

I chose to give them the money, mainly so I’d have a story to tell, and one that supports and confirms why so many people have such a dim view of today’s financial-services industry. Practices like this—trivial to me and even laughable, but which can really hurt the poor—has turned this onetime conservative into a populist. Wells Fargo took care of my modest little deposit for thirty-three years. And then part of the octopus, with—forgive the language—its tentacles and suckers wrapped over the face of America, went and ate it without so much as a burp.

Human-resources gospel has always been to make employees feel as if their opinion counted. After all, this is America, and democracy is a good thing, right? Not always.

Your workplace is not a democracy. We know the value of democracy in a representative government, but what value does an opinion contribute to your organization? If you think you are having a heart attack, and you race to the emergency room, do you care what the receptionist thinks is wrong with you? Or do you wait for the cardiologist?

Ninety percent of the people in any organization at any given time are not key decision-makers. Their role is to implement decisions to the best of their ability, not to comment on them. If you subscribe to the idea that everyone’s opinion has to count, in effect you are handing out veto power to the majority when only a minority has the power to say yes. This sets up a paradigm in which it’s very difficult to take positive action. You create a situation in which people feel buy-in is optional. This leads to resistance that can stall or even sabotage your plans. Reality-based leaders are clear that the highest value the talent under their leadership can offer is to implement decisions with excellence. They value action over opinion.

If you are a decision-maker faced with making plans that others will implement, you may wish to consult with people who have relevant expertise and experience. But avoid gathering opinions for the sake of inclusiveness. The opinions of people with no relevant expertise are of no value to you. They will be superfluous at best, counterproductive at worst. Does this mean that you don’t care about these people as valuable members of the team? Absolutely not. And that’s just one of several good reasons not to encourage them to editorialize about decisions and instead make it clear to them that their action—in executing the plan, mitigating its risks, and making it work for your customers—is far more valuable to the company.

The Case Against Customer Engagement

JONATHAN SALEM BASKIN leads the North American practice for Futurelab and is author of, most recently, Histories of Social Media. From his blog, Dim Bulb, at www.dimbulb.net.

When did it become marketing orthodoxy that commanding more time and attention from consumers is good for brands?

If you think about it, the idea runs contrary to history, both distant and immediate. Here in America, talking about commerce was considered in poor taste up to the Jacksonian market revolution of the 1830s. Selling was simply something you did when people evidenced a need to buy, and then you did it at the risk of losing the approval of polite society. Certainly your accomplishments doing so were always suspect (Dutch merchants strove to attain social acceptability hundreds of years prior, as did English merchants, and you can see the evidence of their large townhomes and mock-landed-gentry portrait paintings). They certainly weren’t something to be celebrated: Being a salesman was synonymous with wandering deceit, and even as recently as the 1950s, author Arthur Miller saw in the job a core of existential disappointment.

The role of media in this equation is more immediate but no less clear.

Commercial messages were considered a part of programming, whether in newspapers of the 1700s or on television in the 1950s, though they were considered notices, classifieds, or other forms of updates for the consumption of those who might be particularly interested. Early brands spent media dollars to talk about the lives of their customers, not necessarily the benefits of their businesses (AT&T was a pioneer of public-advocacy marketing, being an early publisher of information in print; Mobil continued this practice with the invention of advertorials in the 1980s).

It took TV network programmers separating content from advertising and creating the interruption of a commercial message in the late 1950s to give birth to advertising’s Creative Revolution of the 1960s.

Then, the challenge was to create commercial messages that had an existence and value separate from the content that bookended it and, therefore, had an outreach purpose to talk to consumers whether they were a priori interested or not. So advertising got funny, emotional, inside-jokish, and self-aware, evolving into an entertainment medium of its own. Awards were (and are) given for ads that were creatively brilliant. The rest of what had once been marketing—the messy, uncool, and socially unacceptable behaviors of selling—was relegated to the periphery. I remember when I worked at Grey Advertising in the 1980s and the direct-marketing division was literally in the basement. Asking for a response? How gauche.

Advertising no longer sold—it engaged. This thinking still guides marketers today, and social-media theorists are no exception.

So now it’s common to hear an agency person lecture about the importance of having an ongoing conversation with consumers. Marketers need to engage and produce content to keep in front of their audiences, and they can’t produce the stuff alone but must rather involve said audiences in co-creation. The more the better. The proof? People like to talk, of course, and there’s all this free technology that you need to fill up with stuff to fill up their time. Just go forth and produce, curate, edit, distribute, syndicate, blog, post, share, etc.

About two thousand years of history say this is the wrong approach, and that a marketing strategy in 2011 should be no different than one in, say, 1811:

• Talk only when you have something to say

• Say things that matter to people

• Give people reasons to listen and act upon what you’re talking about

• Don’t abuse the above three points

Kinda simple, don’t you think? Yet it’s the exact opposite of what most brands are doing today. My prediction is that they’re going to rue the day that they decided to waste people’s time instead of treasuring and respecting it. Two thousand years of history can’t be wrong.

Ignorance Is Bliss

As we advance in our careers, we outgrow many inadequacies of our past. We gain through the experience of the assignments we handle; we acquire fresh knowledge from others that equips us to handle things differently from the past. Yet the self-aware professional is conscious that there is bound to be some gap in his knowledge, knows that he may never bridge this gap, and, most important, feels comfortable with this fact.

A long time ago, I met a customer who, while saying goodbye to me at the end of a long and happy association, told me that I should be comfortable about not being technically qualified, even though I was working in the R&D section of an IT company. During my time there, I used to attend myriad meetings with our customers and engineers and must have shown some fallibility somewhere that did not escape the customer’s attention. He was giving me advice on the importance of developing comfort with personal inadequacies.

After that, I have never felt uneasy about being a graduate in political science working in the IT industry. More important, I do not pretend to understand things when I cannot.

Today, I work for R&D service provider MindTree, where highly competent teams tackle complex technical problems. However capable I might be, I simply cannot fathom the complexity and depth of their work. I may sometimes be capable of deep questioning, I may have the intuitive capacity to cut through issues, I may have the breadth of experience to bring in an external viewpoint which blinkered teams that work at the cutting edge of technology may miss—yet none of that gives me the ability or competence to write a software algorithm or understand the physics of how the alternating character of material helps us store information in bits and bytes.

I may add value in some meetings, and not in others. When technical experts speak, my silence may signal my total lack of understanding. But if I open my mouth, I may disturb the harmony. A professional does not need to hog the limelight or monopolize airtime.

If you cannot add true value, then you must not add to the problem by pretending. The more you pretend, the more naked you become. Ever since I received this piece of momentous advice from a guardian angel, I have attended countless meetings where I began by admitting that I am a complete novice or have sat quietly while others have taken center stage, and I have never felt excluded or reduced in stature because of it.

Sometimes, stating your ignorance can be the simplest solution. Others then take it upon themselves to explain complex technical jargon in easy-to-understand language. Concede the ground and wait, emotionally secure. The team will come back to you when they need you, and then you can truly add value.

Who Goes There?

A big part of my work as a coach involves working with high-potential leaders in workshops, keynotes, and webinars. One of my favorite questions to ask these audiences is, “How many of you think of yourselves or have been referred to by others as the go-to person?” Usually, about every hand in the room goes up. I asked that question as a flash poll in a webinar recently, and 98 percent of the four hundred-plus managers and executives on the line affirmed that they are the go-to people.

It’s not surprising, really. Most people who end up in leadership roles have built a reputation for being go-to people.

So what’s wrong with that? Nothing at all when you’re on your way up. Being the person who’s known for getting stuff done is a great way to build your reputation and career. Chances are, though, that you’re eventually going to reach the point at which operating as the go-to person is simply no longer sustainable. The scope of work gets too broad and complex for one go-to person to take things over and heroically save the day.

To grow as a leader, you have to let go of being the go-to person and pick up the profile of being the person who builds a team of go-to people.

Where Empathy Falls Short

Steve Tobak is a marketing and strategy consultant based in Silicon Valley and a former senior executive of a number of public and private companies. From his blog, now on CBS MoneyWatch.

The way leadership gurus and executive coaches talk about empathy, you’d think it’s the be-all, end-all, and cure-all for leaders and their shortcomings. It’s not. The reason is simple: Before empathy can even enter the picture, you have to understand yourself. That, to me, is the primary issue.

Don’t get me wrong—I have nothing against empathy. Empathy’s a good thing. But in a lot of cases, beating yourself or someone else over the head with a “get empathy” mantra isn’t going to do any good because:

Some people simply don’t speak that language. Sure, they can define it, but they can’t do it because their minds aren’t wired that way. It’s true of far more leaders and managers than most people realize.

Leadership or management issues involve people and interactions. The problem is that you can only control at most one side of the equation, you don’t know which side needs help, and if it’s the other guy, can you even empathize with someone who has no empathy for you?

To surmount those obstacles and get through—either to yourself or someone else—you need to speak the language of expectations and assumptions.

You see, on some level, you have more expectations—of yourself, your boss, employees, co-workers, customers, vendors, everyone that matters—than you realize. Everyone does. Lack of awareness of faulty, unreasonable, or misaligned assumptions results in a high percentage of unnecessary workplace issues.

In other words, you expect certain things to happen or people to behave in certain ways. And when they don’t—since people do, in fact, have free will—that creates problems. All sorts of problems.

For example, ever have trouble connecting with your boss, a co-worker, or an employee? Of course you have. Well, I have, with a former CEO. I tried putting myself in his shoes. Being empathetic, or so I thought. But that didn’t work—on his end, my end, or both—I’ll never know which.

What did work was realizing that I expected him to manage me the way I managed others. Don’t say “duh.” So many people do that without even realizing it. For whatever reason—maybe I found it convenient to just write him off as a micromanager and throw up my hands in frustration, who knows—that’s what happened.

Once I realized that I shouldn’t expect him to be anything but himself, I became open to giving him what he needed. And once I did that, he became more comfortable, and we settled into a good relationship.

Now, I know some people will lump that and everything else under the “empathy” banner, but that’s not how it works in a practical sense. Instead of putting myself in his shoes, I really needed to think of myself and my own expectations. Any good shrink will tell you that the solution for narcissism is for the narcissist to first focus on himself. Ironic, isn’t it?

Anyway, here are five tips for improving workplace relationships that don’t involve empathy and work regardless of which side of the equation you’re on:

Before you put yourself in his shoes, try your own on for size. Ever catch yourself saying or thinking, “I can’t figure him out” or “what the hell is he thinking?” The question to ask yourself is what the hell are you thinking? Seriously.

Challenge your own goals, assumptions, and expectations. Chances are you walked into an interaction or a meeting with certain goals or expectations. When it didn’t go as planned, your reaction likely contributed to the issue or conflict. The problem is with the setup—i.e., the expectation, not the interaction, per se. Think about it.

Don’t assume anyone thinks, feels, or behaves as you do. Ever hear yourself say, “why would anyone ____ (fill in the blank: act, manage, run a business, dress, raise a kid) that way?” You can’t ask a more narcissistic question. Why in the world would they not? They’re not like you, and assuming they are is dehumanizing and childish.

Don’t beat yourself—or anyone else—up. Stay positive. This is not a personal failing on either your part or anyone else’s. If you build things up in your head, you’ll only make matters worse. Besides, you’ll never achieve any kind of perspective when you’re angry, upset, or panicky.

If it’s a chronic problem, seek objective counsel. Seriously, if this sort of thing happens to you a lot, you’re probably not even aware that you’re setting yourself up for all kinds of problems by setting expectations for interactions that aren’t reasonable. Get some help; it’ll improve your relationship immensely.

The bottom line is this: The drumbeat of a leadership fad du jour drowns out the nuances that make it work. To have empathy, you first have to know yourself. If you don’t do part one, you’ll never get to part two. For some, that takes a lifetime.

Corporate culture is an expression of the company’s personality and genetic makeup—its DNA. Culture reflects the rites, rituals, traditions, and values that both describe and instruct how you handle big ideas, treat big thinkers, take extraordinary risks, and respond to dramatic change. Culture isn’t something that is peripheral or collateral to the business—it’s your very way of doing business. Thus, culture touches everything, influences everything, and affects everything.

Every time you step through fear, ridicule, and resistance and demonstrate dogged determination to pursue your dream, you free the organization to attempt the seemingly impossible. Every time you examine the intersection between trends, face the brutal facts of reality, and engage in opportunity-led innovation instead of crisis-led reaction, you declare war on complacency. Every time you push, prod, and cajole people into going beyond a good solution to find a better solution, you send a message to the entire organization about the power of elegance. Every time you ask a question about how a potential solution will bridge the gap between the user’s experience and the cost targets you’ve established, you challenge the organization to climb higher up the ladder of creativity. And every time you refuse to compromise the user’s dignity in order to cut a corner, you communicate what you value.

If you forget to do all these things, you still build a culture. It’s just that you build a culture of disengagement, a culture of mediocrity, a culture that serves as a boat anchor to any forward progress you try to make.

The Simple Decision Test

I heard a common complaint from a mid-level executive today: “It’s really hard to get closure on any decisions around here.” I wondered whether the chief executive understood the level of frustration. Was the CEO the problem, or were decisions getting bogged down in the bureaucracy, even before getting to the top? In many cases, decisions get derailed by silo rivalry, dysfunctional team dynamics, and leaders who are conflict-averse. As a result, people can’t seem to achieve closure on key decisions.

What should a chief executive do to determine if this closure problem is slowing down his or her firm’s ability to compete effectively in the marketplace? I believe they should occasionally slice through the organization’s layers and ask a simple question of mid-level managers: “Are you waiting excessively for certain decisions to be made by senior executives?” If the answer is yes, then the CEO must trace the flow of a few sidetracked decisions to diagnose the problem. If many mid-level managers express the same frustration, then the CEO knows that the firm has a broader cultural problem; it’s not just a few poor leaders here and there.

Conventional wisdom holds that the cleverer you are, the better your ideas. But in our experience the cleverest people—important as they are in an organization—have a tendency to overestimate their brainpower. Without the added component of curiosity, they stick to their success formula and may not go hunting for better ideas. In other words, they’re just not interested enough.

Curiosity, on the other hand, can more than make up for a lack of brilliance. No less a trailblazer than Albert Einstein once made the disarming comment, “I have no special talents. I am only passionately curious.” This is often the most striking characteristic of a highly successful person. Consider this firsthand description of Scott Cook, founder and CEO of Intuit, by Inc. writer Michael S. Hopkins: “Listening, he seems to forget himself. He seems composed of pure curiosity. He’s like a man who always expects that the next thing someone—anyone—tells him might be the most surprising and enlightening thing he’s heard. He listens without blinking. He learns.”

A curious mind is on the lookout for surprises. It embraces them and finds a way to learn from them. Such thinking has a leavening effect on how we look at things, because when we are curious, we are less likely to take something for granted. We look at an ordinary happening and see something extraordinary. This opens a path to innovation, partly because an ordinary idea in one setting could prove remarkable if applied to another setting.

How dumb is your business? At the risk of drawing the ire of corporate elitists, I submit to you that the dumber your business is, the better off you are. The truth is that great companies are those that can thrive and prosper in the absence of sophistication. As odd as it sounds, businesses that are not dependant on smart talent, capital, or technology can scale faster and easier than those businesses burdened with the aforementioned dependencies. If your business requires smart money (which equals expensive money), or your competitive advantage is tied to a superhero key employee, or your business is built around maintaining a technology advantage, you have more weakness in your business model than you do strengths.

Let’s drill down on the talent argument a bit deeper. I’m not suggesting for a moment that you don’t want to hire tier-one talent. However, I am clearly stating that you don’t want to depend on tier-one talent. Talent is clearly a plus as long as it is a value add and not a business requirement. If your company’s long-term business plan requires the acquisition or retention of the über-employee, then your business not only has a risk-management issue—it is likely not scalable. If your company can’t be operated by mere mortals, you need to reexamine your business logic.

The dumb factor not only applies to talent, capital, and technology—it extends throughout the entire value chain. It applies to your branding, marketing, supply chain, and ultimately to your customer base. If your customer has to be a rocket scientist to understand your value proposition, you have problems. If your employees cannot simply and effectively explain what you do, you have problems.

The last point I want to cover is that of growth as it relates to dumb businesses. Both scalable and non- scalable businesses can achieve growth and sustainable success. However, it is important to understand the distinction between the two. While a business cannot scale without growth, a business can grow without being scalable. If your business model requires implicit customer growth, your business might grow for a time period, but it isn’t scalable.

The moral of this story is that while sophistication and complexity often go hand in hand, they don’t have to be synonymous. Focus on driving down the most complex tasks to the lowest levels of the organization, and then leverage with talent, capital, and technology while avoiding the creation of margin-eroding dependencies.

Don’t Have All the Answers

One of my client companies has a “just in case” culture. What that means is that there are people staying in the office till 10 p.m. or even midnight preparing PowerPoint presentations, “just in case” they are asked a particular tricky question.

This creates the most toxic conditions in business. The message that goes out is that if somebody senior asks a question and you don’t know the answer, you are in deep trouble. This drives a culture of fear and supports the premise that one person can have all the answers.

This is crazy. The world is so dynamic that even trying to have 1 percent of the answers in your head would make your brain explode. The idea of being so smart that you can know everything and predict the future is fantasy.

Every business needs a group of leaders who can deal with ambiguity, change, and surprises. The nature of the business environment means you can never have all the answers; the best leaders are the ones who are resourceful and creative enough to know where to find them when necessary.

The idea of leaders being geniuses is actually destructive—and the impact filters through to all employees, who start believing that to be a leader you have to have all the answers (an impossible goal). It also means that nobody is prepared to share a half-formed thought that might fuel new ideas. Two heads are always better than one, so imagine how good linking together the brainpower of a while organization must be. Whenever someone is too scared to share their thinking early, a potentially extraordinary breakthrough is stillborn.

So be confident that you can’t always know the answers, and don’t expect your people to. It’s simply unreasonable.

Don’t be afraid to say you are unsure. Share your worries and concerns about predicting the future. Be honest when you are lost and ask for help; doing so will encourage a more honest conversation with the whole business.

You will be saying, “What we value are people who are curious, intuitive, and smart”—people who can find out their own answers and make sense of this beautiful world.

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